BLBG: Crude Oil Rises as Growth in China, Japan Buoys Demand Outlook
Sept. 30 (Bloomberg) -- Crude oil rose above $67 a barrel in New York as manufacturing expanded in China and Japan, buoying hopes for a rebound in fuel demand.
Oil is nonetheless heading for its first quarterly decline this year amid swelling fuel inventories in the U.S. The Energy Department will probably report that supplies of crude and fuel increased last week, according to a Bloomberg survey. Chinese manufacturing rose for a sixth month in September and Japanese industrial output climbed for a sixth time in August.
“Emerging markets have definitely been driving the demand recovery,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “Industrial production has increased. We will see a gradual improvement in the economy, but prices have got ahead of the physical fundamentals.”
Crude oil for November delivery rose as much as $1.28, or 1.9 percent, to $67.99 a barrel in electronic trading on the New York Mercantile Exchange. It was at $67.89 a barrel at 11:14 a.m. London time.
Oil is poised for a 2.9 percent decline for the three months ending today, the first drop in three quarters.
Chinese manufacturing expanded on government stimulus spending and record bank lending, a purchasing managers’ index released by HSBC Holdings Plc showed. The index dropped to a seasonally adjusted 55 from 55.1 in August, HSBC said today. A reading above 50 indicates an expansion.
Japanese factory output rose 1.8 percent last month after climbing 2.1 percent in July, the Trade Ministry said today in Tokyo, as emergency spending by governments worldwide rekindled global trade.
U.S. Stockpiles
U.S. crude inventories rose to 340 million barrels last week, according to an American Petroleum Institute report yesterday. Gasoline supplies decreased 1.72 million barrels to 212.5 million, it said.
“There is still this feeling that the worst is over so eventually the economy is going to pull us out of this,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “The fundamentals don’t look good but we’ll see fund buying interest at this level.”
A weekly Energy Department report scheduled for release at 10:30 a.m. in Washington will probably show crude stockpiles rose 2 million barrels last week, according to the median estimate of 17 analysts surveyed by Bloomberg News. Gasoline and distillate fuel inventories also increased, the survey showed.
Consumer Confidence
Gasoline inventories probably gained 1 million barrels from 213.1 million the week before, according to the responses. Supplies of distillate fuel, a category that includes heating oil and diesel, likely increased 1.2 million barrels from a 26- year high of 170.8 million the prior week.
Confidence among U.S. consumers unexpectedly fell in September as a rising unemployment rate weighed on households, the New York-based Conference Board said yesterday. The group’s confidence measures of present conditions and its expectations for six months from now declined.
Brent crude oil for November settlement rose as much as $1.18, or 1.8 percent, to $66.67 a barrel on the London-based ICE Futures Europe exchange. It was at $66.60 at 11:14 a.m. local time.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
